A Parks Associates analysis reported that SVOD churn rate dropped from 46% in third quarter 2019 to 38% in third quarter 2020. Among recent launches, the churn rate of Disney+ was at 13%, and HBO Max, Apple TV+, and Peacock all had churn rates at around 20%. The more established Netflix, Amazon Prime Video and Hulu all had churn rates significantly below the industry average. Steve Nason, the Research Director at Parks Associates, notes with COVID-19, and consumers home bound, they had more time to watch and evaluate SVOD services over a longer period of time. During that time SVOD providers heavily promoted their services including free trials.
Nason also points out that with all the new services launched, SVOD may reach a tipping point in 2021. Cord cutters who cancelled their monthly pay-TV subscription and opted for SVOD providers to save money, may soon find out that by stacking a number of streaming services they will be approaching the same monthly fees as their pay-TV subscription. Consequently, paying for too many SVOD services could result in an increase with churn rates.
Nason expects long running video providers Netflix, Hulu and Amazon Prime Video along with Disney+ that have built brand affinity and brand equity, will be less impacted by cancellations than recent launches. In response, expect SVOD providers to offer more exclusive content and promos to maintain (and grow) subscribers. Additionally, Nason expects no major SVOD launches in the near future, beyond the already announced Paramount+ and recently launched Discovery+, for services that will truly threaten the top of the subscription OTT hierarchy.
From the article, "A Challenge For Video Streamers Will Be Keeping Subscribers" by Brad Adgate.
